United States v. O'Keeffe et al

Filing 22

ORDER granting in part and denying in part 15 Motion to Dismiss. Signed by District Judge Keith Starrett on 10/18/2017 (dtj)

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF MISSISSIPPI
EASTERN DIVISION
UNITED STATES ex rel. RICHARD
M. OKEEFFE, JR., M.D.,
v.

PLAINTIFF
CIVIL ACTION NO. 2:16-CV-48-KS-MTP

THE RIVER OAKS MANAGEMENT
COMPANY, LLC, et al.

DEFENDANTS

MEMORANDUM OPINION AND ORDER
For the reasons below, the Court grants in part and denies in part
Defendants’ Motion to Dismiss [15]. The Court denies the motion as moot with
respect to Plaintiff’s claim of “corporate practice of medicine,” but the Court grants the
motion in all other respects.
I. BACKGROUND
This is a qui tam action under the False Claims Act (“FCA”).1 Relator/Plaintiff
was a physician employed by Defendants. He contends that Defendants conspired to
violate the federal Anti-Kickback Statute, the Stark Law, and the False Claims Act by
providing payments to physicians as remuneration for referrals of patients, and
knowingly submitting claims for reimbursement to Medicare and Medicaid that falsely
represented that the claims complied with applicable federal law. Defendants filed a
Motion to Dismiss [15], which the Court now addresses.
II. STANDARD OF REVIEW
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See 31 U.S.C. § 3729, et seq.

To survive a motion to dismiss under Rule 12(b)(6), “a complaint must contain
sufficient factual matter, accepted as true, to state a claim to relief that is plausible on
its face.” Great Lakes Dredge & Dock Co. LLC v. La. State, 624 F.3d 201, 210 (5th Cir.
2010) (punctuation omitted). “To be plausible, the complaint’s factual allegations must
be enough to raise a right to relief above the speculative level.” Id. (punctuation
omitted). The Court must “accept all well-pleaded facts as true and construe the
complaint in the light most favorable to the plaintiff.” Id. But the Court will not accept
as true “conclusory allegations, unwarranted factual inferences, or legal conclusions.”
Id. Likewise, “a formulaic recitation of the elements of a cause of action will not do.”
PSKS, Inc. v. Leegin Creative Leather Prods., Inc., 615 F.3d 412, 417 (5th Cir. 2010)
(punctuation omitted). “While legal conclusions can provide the framework of a
complaint, they must be supported by factual allegations.” Ashcroft v. Iqbal, 556 U.S.
662, 679, 129 S. Ct. 1937, 1950, 173 L. Ed. 2d 868 (2009).
Additionally, “complaints under the FCA must comply with Rule 9(b), which
provides that ‘[i]n alleging fraud or mistake, a party must state with particularity the
circumstances constituting fraud or mistake.’” United States ex rel. Rigsby v. State
Farm Fire & Cas. Co., 794 F.3d 457, 466 (5th Cir. 2015).
Rule 9(b) generally requires the plaintiff to plead the time, place, and
contents of the false representation and the identity of the person making
the representation. However, an FCA claim can meet Rule 9(b)’s standard
if it alleges “particular details of a scheme to submit false claims paired
with reliable indicia that lead to a strong inference that claims were
actually submitted.”
United States v. Bollinger Shipyards, Inc., 775 F.3d 255, 260 (5th Cir. 2014) (quoting
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United States ex rel. Grubbs v. Kanneganti, 565 F.3d 180, 190 (5th Cir. 2009)).
Moreover, “[m]alice, intent, knowledge, and other conditions of a person’s mind may
be alleged generally.” FED. R. CIV. P. 9(b).
III. DISCUSSION
A.

Counts I & II – Anti-Kickback Statute & Stark Law
First, Defendants argue that neither the Anti-Kickback Statute nor the Stark

Law provide a private right of action. Defendants are correct. Neither the AntiKickback Statute2 nor the Stark Law3 provide a private right of action. Plaintiff
effectively concedes this point, arguing that he may assert a claim under the False
Claims Act premised upon violations of the Anti-Kickback Statute or Stark Law.
Therefore, the Court grants Defendants’ motion with respect to any independent claims
under the Anti-Kickback Statute or Stark Law that Plaintiff may have asserted.
B.

Count III – False Claims Act
Plaintiff referred to numerous sections of the FCA in his Complaint. Defendants

argue that he failed to state a claim under any of them.

2

See United States ex rel. Nunnally v. West Calcasieu Cameron Hosp., 519 F.
App’x 890, 893 n. 5 (5th Cir. 2013) (citing 42 U.S.C. § 1320a-7b(b)(1-2)); Ameritox,
Ltd. v. Millenium Labs., Inc., 803 F.3d 518, 522 (11th Cir. 2015); Rzayeva v. United
States, 492 F. Supp. 2d 60, 78 (D. Conn. 2007); United States ex rel. Barrett v.
Columbia/HCA Healthcare Corp., 251 F. Supp. 2d 28, 37 (D. D.C. 2003); United
States ex rel. Hartwig v. Medtronic, Inc., No. 3:11-CV-413-CWR-LRA, 2014 U.S.
Dist. LEXIS 44475, at *48 n. 15 (S.D. Miss. Mar. 31, 2014).
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Ameritox, 803 F.3d at 522; United States ex rel. Drakeford v. Tuomey
Healthcare Sys., 675 F.3d 394, 396 (4th Cir. 2012); United States ex rel. Schiff v.
Marder, 208 F. Supp. 3d 1296, 1316 (S.D. Fla. 2016).
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1.

Section 3729(a)(1)(A)

First, Defendants argue that any claims asserted by Plaintiff under Section
3729(a)(1)(A) must be dismissed because he did not allege any specific false claims, any
scheme to submit false claims, or any reliable indicia that false claims were submitted.
In response, Plaintiff contends that he has, in fact, pleaded sufficient facts to state a
claim under Section 3729(a)(1)(A), but he did not direct the Court to such facts.
Section 3729(a)(1)(A) prohibits “knowingly present[ing], or caus[ing] to be
presented, a false or fraudulent claim for payment or approval.” 31 U.S.C. §
3729(a)(1)(A). To state a claim under Section 3729(a)(1)(A), one must allege: “(1) a false
statement or fraudulent course of conduct; (2) that was made or carried out with the
requisite scienter; (3) that was material; and (4) that caused the government to pay out
money (i.e., that involved a claim).” United States ex rel. Spicer v. Westbrook, 751 F.3d
354, 365 (5th Cir. 2014). The plaintiff must allege “particular details of a scheme to
submit false claims paired with reliable indicia that lead to a strong inference that
claims were actually submitted.” Grubbs, 565 F.3d at 190. Such reliable indicia include
“dates that services were fraudulently provided or recorded, by whom, and evidence of
the department’s standard billing procedure.” Id. at 189. While a plaintiff is not
required to plead “exact dollar amounts, billing numbers, or dates to prove . . . that
fraudulent bills were actually submitted,” id. at 190, he is not absolved “of the burden
of otherwise sufficiently pleading the time, place, or identity details of the traditional
standard, in order to effectuate Rule 9(b)’s function of fair notice and protection from
frivolous suits.” Nunnally, 519 F. App’x at 895.
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Plaintiff claims that Defendants violated Section 3729(a)(1)(A) by knowingly
presenting claims that falsely certified compliance with the Anti-Kickback Statute. But
Plaintiff pleaded no specific facts related to the allegedly false claims. Accordingly, he
alleged neither “particular details of a scheme to submit false claims” nor “reliable
indicia” to support such an allegation. Grubbs, 565 F.3d at 190. Therefore, the Court
finds that he failed to state a claim under Section 3729(a)(1)(A). See id.; Nunnally, 519
F. App’x at 894-95 (where plaintiff failed to allege any particular facts about claims
submitted for which defendant expressly certified compliance with federal law, he
failed to state a claim under FCA).
2.

Section 3729(a)(1)(B)

Next, Defendants argue that any claims asserted by Plaintiff under Section
3729(a)(1)(B) must be dismissed because Plaintiff did not allege any specific facts
regarding allegedly false records or statements in support of a false claim. In response,
Plaintiff contends that he has, in fact, pleaded sufficient facts to state a claim under
Section 3729(a)(1)(B), but he did not direct the Court to such facts.
Section 3729(a)(1)(B) prohibits “knowingly maki[ing], us[ing], or caus[ing] to be
made or used, a false record or statement material to a false or fraudulent claim.” 31
U.S.C. § 3729(a)(1)(B). “The recording of a false record, when it is made with the
requisite intent, is enough to satisfy the statute.” Grubbs, 565 F.3d at 192. While
allegations of specific incidents may be sufficient to state a claim under Section
3729(a)(1)(B), id., generalized allegations of written certifications are not sufficient to
carry a plaintiff’s burden under Rule 9(b). Nunnally, 519 F. App’x at 895.
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Like the plaintiff in Nunnally, Plaintiff generally alleged that Defendants
knowingly caused false certifications and representations of compliance to be made
when it submitted false claims for payment. He provided no particular allegations of
fact regarding specific documents, records, statements, or the providers who allegedly
made them. Such generalized allegations are not sufficient to state a claim for relief
under Section 3729(a)(1)(B). Id.
3.

Section 3729(a)(1)(G)

Next, Defendants argue that any claims asserted by Plaintiff under Section
3729(a)(1)(G) must be dismissed because Plaintiff did not allege any specific facts to
support it. In response, Plaintiff contends that he has, in fact, pleaded sufficient facts
to state a claim under Section 3729(a)(1)(G), but he did not direct the Court to such
facts.
Section 3729(a)(1)(G), the “reverse false claims” provision, prohibits “knowingly
mak[ing], us[ing], or caus[ing] to be made or used, a false record or statement material
to an obligation to pay or transmit money or property to the Government, or knowingly
conceal[ing] or knowingly and improperly avoid[ing] or decreas[ing] an obligation to
pay or transmit money or property to the Government.” 31 U.S.C. § 3729(a)(1)(G). “[A]
person is liable under the reverse-FCA provision if he knowingly and improperly avoids
an obligation to pay the United States.” United States ex rel. Simoneaux v. E.I. Dupont
de Nemours & Co., 843 F.3d 1033, 1035 (5th Cir. 2016).”A claim under § 3729(a)(1)(G)
requires (1) that the defendant had an obligation to pay money to the government, (2)
that the defendant used a false statement to avoid or decrease that obligation, (3) that
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the false statement was material, and (4) that the defendant made the false statement
knowingly.” United States ex rel. Branch Consultants, LLC v. Allstate Ins. Co., 668 F.
Supp. 2d 780, 811 (E.D. La. 2009). “Where a complaint ‘makes no mention of any
financial obligation that the [defendants] owed to the government,’ and ‘does not
specifically reference any false records or statements used to decrease . . . an
obligation,’ the court should dismiss the subsection (a)(1)(G) claim.” United States ex
rel. Kester v. Novartis Pharms. Corp., 43 F. Supp. 3d 332, 368 (S.D.N.Y. 2014) (quoting
United States ex rel. Wood v. Applied Research Assocs., Inc., 328 F. App’x 744, 748 (2d
Cir. 2009)).
Here, Plaintiff alleged no specific facts regarding any obligation to pay the
government or false statement knowingly made to avoid payment. At best, Plaintiff
alleged “a formulaic recitation of the elements” of a claim under Section 3729(a)(1)(G),
PSKS, Inc., 615 F.3d at 417, and that is insufficient to meet the requirements of Rule
12(b)(6), much less the more stringent requirements of Rule 9(b). Therefore the Court
must dismiss Plaintiff’s claim under Section 3729(a)(1)(G).
4.

Section 3730(h)

Defendant argues that Plaintiff has not alleged sufficient facts to state a claim
of retaliation under Section 3730(h). In response, Plaintiff contends that he has alleged
sufficient facts.
Section 3730(h) provides a cause of action for those “discharged, demoted,
suspended, threatened, harassed, or in any other manner discriminated against in the
terms and conditions of employment because of [their] lawful acts . . . in furtherance
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of an action under” the FCA “or other efforts to stop 1 or more violations” of the FCA.
31 U.S.C. § 3730(h)(1). To state an FCA retaliation claim, a plaintiff must allege
sufficient facts to demonstrate: “(1) he engaged in protected activity, (2) his employer,
or the entity with which he has contracted or serves as an agent, knew about the
protected activity, and (3) he was retaliated against because of his protected activity.”
United States ex rel. Bias v. Tangipahoa Parish Sch. Bd., 816 F.3d 315, 323 (5th Cir.
2016).
In his briefing, Plaintiff merely argued: “In his Relator Complaint, O’Keeffe has
alleged that Defendants retaliated against him and his wife,” without directing the
Court to any facts to support a retaliation claim. Regardless, Plaintiff plainly alleged
that he voluntarily resigned because of a difference of opinion regarding Defendants’
practices. He was not “discharged, demoted, suspended, threatened, harassed, or in
any other manner discriminated against in the terms and conditions of employment”
because, according to his own pleading, all the allegedly retaliatory actions occurred
after he had voluntarily resigned. And he did not allege constructive discharge.
Therefore, Plaintiff failed to state a claim of retaliation under Section 3730(h).
C.

“Corporate Practice of Medicine”
Finally, Defendant argues that Plaintiff’s claim of “corporate practice of

medicine” must be dismissed. In response, Plaintiff represents that he is not bringing
such a claim. Therefore, the Court denies this aspect of Defendant’s motion as moot.
IV. CONCLUSION
For these reasons, the Court grants in part and denies in part Defendants’
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Motion to Dismiss [15]. The Court denies the motion as moot with respect to
Plaintiff’s claim of “corporate practice of medicine,” but the Court grants the motion
in all other respects.
SO ORDERED AND ADJUDGED this __18th___ day of __October_________,
2017.

s/Keith Starrett
UNITED STATES DISTRICT COURT

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